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Market dips as report says Saudi Arabia sends tanks to Bahrain

Market dips as report says Saudi Arabia sends tanks to Bahrain

A report that Saudi Arabia has sent tanks to neighbouring Bahrain knocks UK shares and pushes oil and gold prices higher.

The Saudi Arabia stock exchange fell nearly 500 points or over 5% after a local news agency reported Saudi tanks were heading to neighbouring Bahrain while other reports suggested unrest in the kingdom was picking up momentum.

Eyewitness reports say Saudi Arabia is sending 15 tanks to Bahrain to help shore up the country's government ahead of pro-democracy marches in the country. 

Last week Saudi's ruling King Abdullah unveiled $36 billion worth of benefits for the country's poorest people to help prevent unrest spreading.

According to the BBC, a Facebook site calling for a 'day of rage' in Saudi Arabia on 11 March has seen its number of subscribers increase from 400 to 12,000 in recent days.

Saudi Arabia has the fifth largest oil and gas reserves in the world and is the second largest exporter after Russia. The unrest that is sweeping the region and led to changes in government in Tunisia and Egypt and violent struggles in Libya has raised concerns that Saudi too will become embroiled. That could lead to a sharp spike in oil prices and potentially throw the global recovery off kilter.

Many analysts believe if the cost of oil climbs and stays at around the $120 per barrel level global growth will slow. Commentators point out that soaring oil prices have often been a precursor to recession in the US in the past.

Yesterday the cost of a basket of oil from the OPEC nations rose to $108 while the cost of North Sea Brent was back on the rise today at over $112 per barrel.

The price of gold jumped another $11.10, or 0.79%, to $1,421.

In the UK the FTSE 100 edged to a day's low of 5,979 points, down 0.2% on the news, having touched a peak of 6,040 earlier in the day.

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